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Peoria, Ill.-based RLI Corp. reported quarterly net earnings of $14.4 million (56 cents per diluted share), a 59 percent gain over the $9.1 million (45 cents per diluted share) posted in the same quarter last year. This result includes quarterly operating earnings of $14.2 million (55 cents per diluted share) which were up 78 percent from last year’s $7.9 million (39 cents per share) result. All total dollar and per share results set RLI records, according to a company statement.
RLI operating earnings consist of net earnings after the elimination of after-tax realized investment gains/losses. This measure is useful in gauging core operating performance across reporting periods, but may not be comparable to other companies’ definitions of operating earnings.
Record Underwriting Profits
The company posted quarterly underwriting profits of $9.7 million — RLI’s most profitable quarter ever — on a 91.2 net GAAP combined ratio. This result compares to a $2.5 million gain on a 96.6 combined ratio for the same period last year. Property profits led the way, benefiting from a 58.7 combined ratio for the first three months of the year. The casualty segment registered profits on the strength of an improved combined ratio. Surety business was down quarter to quarter, but slightly improved over year-end results.
Net premiums earned grew 47 percent in the quarter, to $109.1 million, driving a 42 percent increase in consolidated revenue. Gross premiums written also grew; the $173.9 million result was an 11 percent improvement.
Investment Income Surges
Investment income grew to record levels in the first three months of 2003, reaching $10.7 million, a 17 percent increase over last year. This growth was attributable to increased cash flows from operations and the infusion of new capital from 2002’s equity offering. Invested asset growth of 24 percent over the same period last year helped push total assets to $1.77 billion.
The company’s consolidated investment portfolio generated a 0.4 percent total return year to date. The equity portfolio registered a negative 3.6 percent return for the quarter, which slightly trailed the S&P 500 Index’s return of negative 3.2 percent. RLI’s bond portfolio continued its strong performance from 2002, generating a total return of 1.6 percent for the first quarter of 2003.
Comprehensive earnings, which include after-tax unrealized gains/losses from the investment portfolio, posted a $9.0 million gain for the quarter ($.35 per share). This result was 17 percent less than the $10.8 million (53 cents per share) level from the same period last year.
As of March 31, 2003, $101.1 million of cumulative unrealized gains
remained in the RLI investment portfolio. Over the past 20 years, the equity portfolio has generated a 12.3 percent average annual return.
During the quarter, the company’s directors declared a 9 cents per share cash dividend. The dividend was paid on April 15, 2003, to shareholders of record as of March 31, 2003.
RLI Corp.’s insurance subsidiaries are RLI Insurance Co., Mt. Hawley Insurance Co., Underwriters Indemnity Co. and Planet Indemnity Co.